Conceptualisation of CSR

Module-1
Defining CSR & its Importance

–Overview of CSR
–What is CSR?
–What is the importance of CSR and
its benefits ?
 Module Objectives
• To discuss the concept of CSR
• Identify contributions of CSR for making
business relevant
• What benefits CSR can derive for
community and society at large
 CSR: Towards Sustainable Future
• The role of corporates by and large has been understood
in terms of a commercial business paradigm of thinking
that focuses purely on economic parameters of success.
• As corporates have been regarded as institutions that
cater to the market demand by providing products and
services, and have the onus for creating wealth and jobs,
their market position has traditionally been a function of
financial performance and profitability.
• Over the past few years, because of rising globalisation
and pressing ecological issues, the perception of the role
of corporates in the broader societal context within
which it operates, has been altered.
 CSR & its Stakeholders
Stakeholders (employees, community, suppliers
and shareholders) today are redefining the role
of corporates considering the corporates’
broader responsibility towards society and
environment, beyond economic performance,
and are evaluating whether they are conducting
their role in an ethically and socially responsible
manner.
 CSR: An Historical Perspective
• Philosophers like Kautilya from India and pre-
Christian era philosophers in the West
preached and promoted ethical principles
while doing business.
• The concept of helping the poor and
disadvantaged was cited in much of the
ancient literature.
 The religious link to CSR
• The idea was also supported by several religions
where it has been intertwined with religious
laws. “Zakaat”, followed by Muslims, is donation
from one’s earnings which is specifically given to
the poor and disadvantaged.
• Similarly Hindus follow the principle of
“Dhramada (Dharma thru DATA)” and Sikhs the
“Daashaant (Dasvand) meaning 10% of earning”.
 CSR during Pre-independence era
• In India, in the pre independence era, the businesses
which pioneered industrialisation along with fighting for
independence also followed the idea.
• They put the idea into action by setting up charitable
foundations, educational and healthcare institutions, and
trusts for community development.
• The donations either monetary or otherwise were
sporadic activities of charity or philanthropy that were
taken out of personal savings which neither belonged to
the shareholders nor did it constitute an integral part of
business.
CSR during Post-independence era
• The term CSR itself came in to common use in the
early 1970s although it was seldom abbreviated.
• By late 1990s, the concept was fully recognised;
people and institutions across all sections of society
started supporting it.
• This can be corroborated by the fact that while in
1977 less than half of the Fortune 500 firms even
mentioned CSR in their annual reports, by the end
of 1990, approximately 90 percent Fortune 500
firms embraced CSR as an essential element in their
organisational goals, and actively promoted their
CSR activities in annual reports.
 Evolution of CSR
According to “Altered Images: the 2001 State of
Corporate Responsibility in India Poll”, a survey
conducted by Tata Energy Research Institute
(TERI), the evolution of CSR in India has followed a
chronological evolution of 4 thinking approaches:
• Approach-1: Ethical Model(1930 –1950)
• Approach-2:Statist Model (1950 –1970s)
• Approach-3:Liberal Model (1970s –1990s)
• Approach-4:Stakeholder Model (1990s –
Present)
 Approach-1: Ethical Model(1930 –1950)

• One significant aspect of this model is the promotion

of “trusteeship” that was revived and reinterpreted
by Gandhiji. Under this notion the businesses were
motivated to manage their business entity as a trust
held in the interest of the community. The idea
prompted many family run businesses to contribute
towards socio-economic development.
• The efforts of Tata group directed towards the
wellbeing of the society are also worth mentioning
in this model.
 Approach-2:Statist Model (1950 –1970s)

• Under the leadership of Jawahar Lal Nehru,

this model came into being in the post-
independence era.
• The era was driven by a mixed and socialist
kind of economy.
• The important feature of this model was that
the state ownership and legal requirements
decided the corporate responsibilities.
Approach-3:Liberal Model (1970s –1990s)

• The model was encapsulated by Milton

Friedman.
• As per this model, corporate responsibility is
confined to its economic bottom line. This
implies that it is sufficient for business to obey
the law and generate wealth, which through
taxation and private charitable choices can be
directed to social ends.
 Approach-4: Stakeholder Model (1990s –
Present)
• The model came into existence during 1990s
because of realisation that with growing economic
profits, businesses also have certain societal roles
to fulfil.
• The model expects companies to perform
according to “triple bottom line” approach (profit,
people & planet).
• The businesses are also focusing on accountability
and transparency through several mechanisms.
 Understanding CSR
• Corporate

• Social

• Responsibility
 Defining CSR
In broad terms-
“CSR relates to responsibilities
corporations have towards society within
which they are based and operate, not
denying the fact that the purview of CSR
goes much beyond this. CSR is
comprehended differently by different
people.”
Corporate Commitment & Defining CSR
• Some perceive it to be a commitment of a company to
manage its various roles in society, as producer, employer,
customer and citizen in a responsible manner while for
others it is synonymous to Corporate Responsibility (CR) or
Corporate Citizenship or Social Action Programme (SAP).
• Of late, the term has also been started to link up with Triple
Bottom Line Reporting (TBL) such as- People, Planet &
Prosperity based on “Profit, People & Planet” principles
which essentially measures an enterprise’s performance
against economic, social and environmental indicators.
• Discourses on CSR suggest that many definitions of CSR exist
within the business community, and CSR continues to be an
evolving concept, with no single definition that is universally
accepted.
 CSR # Definition-1
• Philip Kotler and Nancy Lee (2005)
define CSR as “a commitment to improve
community wellbeing through
discretionary business practices and
contributions of corporate resources.”
• Mallen Baker refers to CSR as “a way
companies manage the business
processes to produce an overall positive
impact on society.”
 CSR # Definition-2
• According to World Business Council for
Sustainable Development “Corporate Social
Responsibility is the continuing commitment
by business to behave ethically and contribute
to economic development while improving the
quality of life of the workforce and their
families as well as of the local community and
society at large”.
 CSR # Definition-3
• Archie Carroll in 1991 describes
CSR as a multi layered concept
that can be differentiated into
four interrelated aspects –
economic, legal, ethical and
philanthropic responsibilities.
• Carroll presents these different
responsibilities as consecutive
layers within a pyramid, such
that “true” social responsibility
requires the meeting of all four
levels consecutively. The model
probably is the most accepted
and established.
 Emerging Definition of CSR
• CSR is a business imperative: Whether pursued as
a voluntary corporate initiative or for legal
compliance reasons, CSR will achieve its intended
objectives only if businesses truly believe that CSR
is beneficial to them.
• CSR is a link to sustainable development:
businesses feel that there is a need to integrate
social, economic and environmental impact in
their operation; and
• CSR is a way to manage business: CSR is not an
optional add on to business, but it is about the
 Myths with CSR
• In the absence of a universally accepted
definition for CSR, there are some myths that
surround the concept:
– Myth # 1: Businesses invest the money; therefore,
they decide the modus operandi of the CSR
initiative.
– Myth # 2: Financial resources alone can meet CSR
needs of an enterprise.
– Myth # 3: CSR is interchangeable with corporate
sponsorship, donation or other philanthropic
activities.
 Myth # 1
There is a notion that since businesses invest money
in society, they are the one who will be deciding
upon the modus operandi of the CSR initiative.
However, this is not true. CSR driven by the mandate
of an enterprise alone may not generate desired
results. Stakeholders must be involved from the
onset in defining an initiative to make it successful.
Corporates must not assume that they understand
the needs of a community by taking them at face
value; stakeholder’s needs must be considered
within the local context and culture.
 Myth # 2
In fact, financial resources are only
part of the equation. Besides financial
resources, it is equally or even more
important for the CSR programmes to
be well defined and well accompanied
by adequate human resources if they
are to meet the intended objectives.
 Myth # 3
• The focus of responsible business practices in the
profit sector is hitherto largely confined to
community charity-based projects.

“ While this may have been relevant for the historical

context in the mid-90s when Carroll’s definition was
coined, the current thinking of CSR has moved beyond
philanthropy to in fact encompass all internal and
external segments of business operations: employees,
market environment and community.”
 Social Responsibility of Corporate
• [Link]
HQ0
(What is unique about Corporate
Social Responsibility at The Tata
Group?) 5.13 mts.
What CSR is
What CSR means today ?
 Activity-1
Identify one Tier-1/Tier-2 Company of your choice
and write down the following:
1. Name of the Company
2. Vision of the Company
3. Mission of the Company
4. Objectives of the Company
5. Areas of business operation
6. Annual turnover of the Company for last three
years (ending March 2021, 2022 and 2023)